What Ever Happened to our Global Perspective?

It appears that in times of such economic peril, we lose the global perspective on which we have been so fixated for the past decade. Some have pointed out the probability of a word-wide recession, but most of the concentration has been somewhat ego-centric. Obama and his team have proposed many degrees of change: Capping executive pay (plain stupid and ignorant, appallingly coming from a man that supposedly understands basic economic decision-making), spending & tax relief, and now bailing out struggling homeowners themselves (possibly the most poignant and inspired yet). However, an official-but-truthfully-much-more 2 quarters deep in this recession, I hope we can take a look at the changes having occured in the Eurozone and Japan, or the other 2 developed market economies in the world. According to the Financial Times today, Eurozone for the 4Q contracted by 1.5%, equal to that of the UK (which is not a Eurozone country). This GDP contraction is significantly more than the U.S.'s contraction, and shows the acceleration of a unified Europe's recessionary problems. While the GBP has devalued significantly against a general basket, the Euro has held up quite nicely. But while the unified currency prevents stability, the poor performance of certain countries (Germany) can sink the ship. As we can see from a macro perspective, Globalization means we rise together and fall together.

In Japan, voters and government seem to be nostalgic of the good old days of dancing to Elvis and perhaps maybe emerging from the "Lost Decade" after a brief period of interest-rate hiking. Former Prime Minister Junichiro Koizumi continues to show his influence of a country no longer technically in his control with the same depth of Vladimir Putin. After a comment recently made concerning the current Prime Minister Aso's handling of the financial crisis in Japan (a mistake made twice certanily justifies the title of insanity in the case of Japan), publications have already forecasted his exit, which would mark Aso as the 5th Japanese prime minister to last less than a year.

"It's hard to imagine two things more 'core' than food and energy."

Change in various prices, 2002-2008 (according to 13D Research):
Bread +250%
Cooking oil +250%
Flour +500%
Butter +250%
Eggs +350%
Potatoes +400%
Bananas +300%
Apples +300%
Fish +200%
Poultry +300%
Meat +200%
Milk +200%

It becomes increasingly difficult to make the argument that these things are volatile and thus must be excluded from the inflation basket. It’s apparent that food and energy have risen steadily in price for the better part of the past two decades. Shadow Government Statistics illustrates this nicely. Click the title for the link.

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